Adapting the Commercial Process to the Evolving Healthcare Delivery Landscape

In July 2016, CMS announced that it plans to initiate a mandatory bundled-payment program in cardiology that parallels its current orthopedic bundled pricing program. This is another indication of CMS’ commitment to alternative payment models that make delivery organizations financially accountable for the cost and quality of care they provide. As healthcare delivery organizations prepare to operate in this environment, we expect to see continued erosion of individual physician influence on product decisions. In its place, committees that include physicians and administrators will exert more influence that reflects institutional priorities. This has important implications for pharmaceutical manufacturers.

In this environment, delivery organizations are trying to make more structured and scientific attempts to look objectively at the value offered by products. Organizations like ICER and The Evidence Street are designed to help providers develop consistent methodologies for evaluating information presented to them. Marrying these insights with their own organizational priorities, delivery organizations will narrow the list of options they provide clinicians. Demands for economic and clinical data will continue as organizations try to understand the differentiated value of pharmaceutical products.

To succeed in this evolving environment, it is growing more critical that manufacturers challenge the assumptions on which they have built their commercial models. Manufacturers must develop and utilize new capabilities to target an evolving customer base that includes healthcare delivery administrators as well as physicians. This will require a greater emphasis on delivering value that extends beyond the acute care environment. Here are three core ideas pharmaceutical manufacturers should consider in modifying their commercial approach and addressing the changing needs of customers.

1) Strategic Account Management: As delivery organizations move toward value-based payment models, manufacturers will need to understand where their clients are in this transition. Some organizations have grown extensively by acquisition or affiliation, and others less so. All are in different stages of standardizing clinical practice and moving purchase decisions from a clinical prerogative to an institutional function. Finally, each organization has its own strategic and operational priorities that flow from its history, competitive environment, financial and reputational situation. In commercialization efforts going forward, manufacturers will need to take these variables into account in their deployment and product positioning. Accounts themselves can be segmented on these key variables, simplifying the challenge of customizing messaging and positioning.

2) Complex sales skills: Product decision-making is shifting away from individual physicians to committees including hospital administrators and supply chain managers, and relying more on GPOs. Consolidation also means that the impact of committee decisions will increase. In light of these changes, manufacturers need to ensure sales teams have the core competencies and flexibility to engage with a more diverse set of key decision makers that has interests that go beyond the product. Sales representatives will need sophisticated scientific understanding of their products and the economic and clinical benefits they offer. Given these changing dynamics, manufacturers will need to develop new performance metrics that measure the quality of account management rather than just the volume of sales.

3) Stakeholder value: In a value-based environment, delivery organizations need to be able to manage variation in cost and quality. One method being used is the development of care paths and treatment protocols that help to standardize treatment. Another common approach, especially where there are lots of product choices that perform similarly, is to narrow the list of suppliers. Selling in this environment requires demonstrating differentiated economic and clinical value to ensure product adoption. Understanding market needs and customer goals will help to identify what customers value and the data needed to tell an effective value story. To the extent the commercial organization determines it does not have the necessary data to support its messaging, a feedback loop must be developed to provide R&D with insight into how the market is evolving and the types of data that will resonate.

Manufacturers must move quickly to adapt to this changing delivery landscape and develop the new commercial approaches and capabilities required to engage with these stakeholders effectively and successfully. By doing so, they will ensure their commercial models reflect new realities and be prepared to win in this rapidly changing environment.

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